Under what conditions do the following production functions exhibit decreasing, constant, or increasing returns to scale? a.

Question:

Under what conditions do the following production functions exhibit decreasing, constant, or increasing returns to scale?

a. $q=L+K$

b. $q=L^{a} K^{b}$

c. $q=L+L^{a} K^{b}+K$

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

See More Books

Question Posted: Mar 20, 2024 08:00 AM

See More Questions

Solve the right triangle in Fig. 4.94 if a = 2.49 and c = 3.88 A b Fig. 4.94 B a C
As shown in the figure below, what is the sine of angle C? A. 1/5 B.1/26 C.26/5 D. 5 E. 26 B 1 A 5 C
A stock has a return of 12.9 percent and a beta of 1.27. The market return is 12.6 percent and the risk-free rate is 4.13 percent. What's the Jensen alpha of this stock?
First Ownership orders merchandise from several suppliers from around the world. Each of the suppliers has different shipping or transportation terms. At the end of December, First Ownership had the...
Blooper's analysts have come up with the following revised estimates for its magnoosium mine Conduct a sensitivity analysis using the revised data. Label your answers as follows: Range Initial...
(Analyzing changes to credit policy, LO 3, 5) Magundy Inc. (Magundy) imports high-end merchandise from Europe and distributes it to retailers across eastern Canada. Magundy has tended to be very...
Designer and artists, inspectors and repairers, scientists, and other professionals are just some of the people who work in the theme park industry. LO.1
The following selected transactions occurred during 2012 for Caspian Importers. The company ends its accounting year on April 30, 2012: Feb 1 Loaned $14,000 cash to Brett Dowling on a one-year, 8%...
30) Determining the "right" level of capacity is an important strategic decision. TRUE FALSE 31) Both theoretical and practical capacity measure capacity in terms of demand for the output. TRUE FALSE...
What are returns to scale? Under what conditions (that is, for what values of the parameters $a$ and $b)$ does the Cobb-Douglas production function, $q=K^{a} L^{b}$, exhibit constant and...
Suppose that capital and labor are perfect substitutes in production, and a firm is presently using two units of capital and two units of labor to produce four units of output. What is the firm's...
To cool water for drinking during summer, $1 \mathrm{~kg}$ of ice at $-2^{\circ} \mathrm{C}$ is mixed with $5 \mathrm{~kg}$ of water at $27^{\circ} \mathrm{C}$ in an insulated container...
Carol's Cupcakes has grown from a home business into a one of the largest event and wedding catering companies in the area. Its founder, Carol Thompson, first dreamed of owning her own company while...
Many things have changed for businesses in 2022. The previous 2 business years of 2020 and 2021 have tested businesses and the workforce like nothing else. Not only were profits reduced, and...
1) Virginia Tech's motto is "Ut Prosim" which means 'That I May Serve'. Share how you contribute to a community that is important to you. How long have you been involved? What have you learned and...
Person Is Arianna Grande Answer all questions Who are they? How successful are they? Why would companies be interested in partnering with them? Identify one company from their industry that you feel...
Imagine you have just retired after a long and very successful career (as a physiotherapist). Congratulations! You've made such an impact in the world that business and community leaders from around...
With reference to Exercise 5.44, suppose that the percentage had been 51 instead of 50. Use a suitable table or a computer printout of the binomial distribution with n = 18 and = 0.51 to rework the...
Don Griffin worked as an accountant at a local accounting firm for five years after graduating from university. Recently, he opened his own accounting practice, which he operates as a corporation....
A monopoly manufacturing plant currently uses many workers to pack its product into boxes. It can replace these workers with an expensive set of robotic arms. Although the robotic arms raise the...
Before entry, the incumbent earns a monopoly profit of m = $ 10 (million). If entry occurs, the incumbent and rival each earn the duopoly profit, d = $ 3. Suppose that the incumbent can induce the...
A prisoners dilemma game is played for a fixed number of periods. The fully rational solution is for each player to defect in each period. However, in experiments with students, players often...
A family has a $117,443, 25-year mortgage at 5.4% compounded monthly. (A) Find the monthly payment and the total interest paid. (B) Suppose the family decides to add an extra $100 to its mortgage...
Comparing the actual and planned cost of a consulting engagement completed by an engineering firm such as Allied Engineering.
What is the NPV of a project that costs $34,000 today and is expected to generate annual cash inflows of $11,000 for the next 7 years, followed by a final inflow of $14,000 in year 8. Cost of capital...

Under what conditions do the following production functions exhibit decreasing, constant, or increasing returns to scale? a.

Question:

Step by Step Answer:

We can analyze the returns to scale for each production function based on the relationship between the change in inputs and the resulting change in ou...View the full answer

Microeconomics

Students also viewed these Business questions